Finney v. Guy, 189 U.S. 335 (1903)

U.S. Supreme Court

Finney v. Guy, 189 U.S. 335 (1903)

Finney v. Guy

No. 180

Argued February 27, March 2, 1903

Decided April 6, 1903

189 U.S. 335

Syllabus

Where a case turns upon the construction by a state court of a statute of another state, and not upon the validity of such statute, a decision on that question is not necessarily of a federal character. It depends upon the particular facts of each case and the manner in which they are presented, how far such questions can be regarded as coming under the full faith and credit clause of the Constitution.

As decided in Hale v. Allinson,188 U. S. 56, a receiver of an insolvent corporation appointed by the courts of Minnesota under the statutes of that state then existing cannot maintain an action outside of that state to enforce the statutory double liability of the stockholders; in refusing to allow such a receiver to maintain such an action, the courts of Wisconsin did not fail to give full faith and credit to the laws and judgments of Minnesota, under the federal Constitution.

Where the law of a foreign jurisdiction has been proved as a fact, the evidence of a witness, stating such law and decisions as to its meaning and effect, does not preclude the court from itself consulting and construing such statute and decisions and deducing its own opinion in regard thereto, Eastern Building & Loan Assn. v. Williamson, ante, p. 189 U. S. 122, nor is the right and duty of the courts to themselves construe statutes and decisions of a foreign jurisdiction altered because such law and decisions are set forth in a pleading which is demurred to instead of being proved as facts on a trial.

Whether, apart from federal questions, the courts of one state should permit an action of this nature to be maintained on the principle of comity is a question exclusively for the state court to decide.

This action was commenced in the proper court of the State of Wisconsin to enforce the shareholders' liability under a Minnesota statute, in a corporation of Minnesota and doing business in that state. The defendant demurred to the complaint on the ground, among others, that it did not state facts sufficient to constitute a cause of action. The demurrer was overruled by the trial court and judgment given for the plaintiff, which was reversed by the supreme court of the state, and the case has been brought here by plaintiff to review the judgment of reversal.

The facts alleged in the complaint are in substance these: that during all the times therein mentioned, the American Savings & Loan Association, one of the plaintiffs herein, was a corporation organized under the laws of the State of Minnesota, and on June 18, 1896, William D. Hale, another plaintiff in this action, was appointed receiver thereof; that the Farmers' & Merchants' State Bank was on June 6, 1888, a banking organization, by virtue of the laws of the State of Minnesota, and doing business as such; that the bank became insolvent in June, 1893, and the entire net proceeds of the bank's assets amounted to the sum of $12,539.95, all of which had been paid over to the State of Minnesota on account of the indebtedness of the bank to the State of over $28,000, which was a preferred claim under the laws of that state; that its other debts amounted to the sum of more than $100,000, and it had no property to satisfy the same; that the defendant, Mary A. Guy, a resident of the State of Wisconsin, was the owner of three shares of the capital stock of the bank in her own right, and that she owned sixteen shares of the stock of the bank as executrix of the will of her husband and as legatee thereunder.

It was then averred that suit had been commenced in Minnesota in 1894 to enforce the liability of the stockholders of the bank under and by virtue of the laws and Constitution of the State of Minnesota; that such suit had been commenced by the American Savings & Loan Association, which was a creditor of the bank, in behalf of itself and all other creditors who should come in and make themselves parties to the suit and

prove their claims therein, and against all the stockholders of the bank; process was, however, not served on this defendant, but only on those residing within the state; that such proceedings were had in the suit that judgment was duly rendered therein on April 28, 1897, in favor of the complainant, the American Savings & Loan Association, for the amount of the indebtedness of the bank to it, and also in favor of the other creditors of the bank, who had duly intervened, for the various amounts due them from the bank. It was also adjudged that the amount of the debts of said bank aggregated the sum of $106,471.71.

It was then further averred in the complaint that Finney (one of the plaintiffs herein) was appointed receiver in the Minnesota suit for the purpose of collecting and enforcing the respective liabilities of the defendant stockholders, and that an order had been made authorizing and empowering him to proceed against those of the defendant shareholders residing in such other jurisdictions for the purpose of enforcing the liabilities of such shareholders, and with full power and authority to distribute the proceeds of such action among the parties entitled thereto, after final payment in full, out of the proceeds, of the costs and expenses incurred, etc. It was then averred that, pursuant to the instructions of the Minnesota court, Finney, as receiver therein, commenced this action against Mary A. Guy, and joined with him as plaintiffs all the creditors of the bank who had proved their claims in the Minnesota suit, and it was also averred that Mrs. Guy was liable to the creditors of the bank in the sum of $3,800, double the amount of the par value of the three shares owned by her individually and of the sixteen shares formerly owned by her husband, and that she was the only stockholder who was a resident of Wisconsin, and therefore the only defendant in the case, and that the full amount of her double liability, if recovered, would be wholly insufficient to pay the indebtedness of the bank after applying everything that could be collected from all the other stockholders, some of whom were insolvent, some had been compromised with, and from others nothing could be collected.

The complaint then set forth several sections of the General Statutes of the State of Minnesota of 1878, among them being sections 5905-5907 and 5911, and it was averred that this action could be maintained by reason of such sections. They are the same as are set forth in Hale v. Allison,188 U. S. 56. It was then averred that decisions in the courts of the State of Minnesota had been rendered relating to the liability of stockholders under those statutes, in corporations organized under the laws of that state, as to the proper method of enforcing such liability. The complaint then referred to some twenty different decisions in the state courts of Minnesota by titles, and gave a reference to the volumes in which they were reported, and it then stated what the law of Minnesota was under those decisions and statutes as to the liability of stockholders and the manner in which that liability could be enforced, and the effect of a judgment recovered in a state court by a creditor in his own behalf and in behalf of all others similarly situated, and it averred that a judgment such as was obtained in the Minnesota suit was conclusive upon stockholders, even though they were not parties thereto, as to all questions of indebtedness of the bank and who were its creditors, and that defendant, though not served with process in that suit, was concluded by the judgment as to her liability as shareholder, except as therein stated. It also averred that, after such a judgment had been obtained, the Minnesota decisions held that, under those statutes, a suit could be maintained in the courts of another jurisdiction, similar to the one before us, and the complaint ended with a prayer for judgment that the defendant should pay the plaintiff the sum of $3,800, with interest thereon since April 28, 1897, and that A.C. Finney, one of the plaintiffs, be appointed receiver herein, to collect the amount and distribute the same pro rata among the other plaintiffs.

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